DOJ Indicts Founder of Anti-Money Laundering Bitcoin Project for Money Laundering

The U.S. Department of Justice (DOJ) indicted the founder of “AML Bitcoin” on money laundering and wire fraud charges. The U.S. Securities and Exchange Commission (SEC) also filed charges, alleging the AML Bitcoin team violated federal securities laws.

According to a court filing dated June 22, Texas resident Rowland Marcus Andrade, the founder of the NAC Foundation, allegedly raised funds by conducting an initial coin offering for tokens representing AML Bitcoin, telling investors that the tokens would ultimately be converted into actual AML Bitcoin (which isn’t actual bitcoin). The SEC and DOJ also charged longtime DC lobbyist Jack Abramoff on conspiracy, lobbying disclosure and deceptive practices counts, alleging he helped mislead investors in the project.

According to Bloomberg, Abramoff will plead guilty and pay more than $50,000 in disgorgement and interest.

“In [its] White Paper, the NAC Foundation claimed AML Bitcoin cryptocurrency would include features that would allow the cryptocurrency to comply with anti-money laundering (also referred to as ‘AML’) and know-your-customer (‘KYC’) regulations and laws by using ‘biometric technologies’ among other methods to confirming the identities of participants in transactions using AML Bitcoin,” the DOJ filing said.

According to a 2018 press release, NAC Foundation claimed AML Bitcoin was “the world’s only patent-pending digital currency with anti-money laundering, know-your-customer, anti-terrorism and theft-resistant properties.”

The DOJ filing was first shared by Seamus Hughes, George Washington University deputy director, Program on Extremism.

Andrade tried to raise up to $100 million during the ICO, which occurred in late 2017 and early 2018, the filing claimed. According to the SEC complaint, Andrade raised about $5.6 million from 2,400 investors.

According to the DOJ filing, Andrade and unnamed colleagues “made public statements and statements to potential purchasers” that “misrepresented the state of the development” of the project., created a fake “rejection campaign,” made statements indicating the NAC Foundation was close to working with government agencies and “misappropriated money obtained through the sale of AML Bitcoin.”

The fake rejection campaign centered around the National Football League, the DOJ filing said.

“Andrade, NAC Foundation and his associates claimed that the advertisement would have aired during the Super Bowl if the television network airing the Super Bowl and the National Football League had not rejected the advertisement as being too controversial,” the filing alleged. “In fact, the NAC Foundation did not have the funds to purchase the advertising time, and the advertisement was never reviewed or rejected by the network or the NFL.”

According to the DOJ, Andrade also claimed to have substantive meetings with the government of Panama and an elected official in California. The filing alleged the Panama claims were “overstated,” and while “Andrade was present at a roundtable discussion and had his photograph taken with the [California] official,” AML Bitcoin “was not discussed.”

Close to $1 million was spent on a new home and real estate, the DOJ filing alleged.

According to a March filing, U.S. officials have also filed to seize “one parcel of real property” owned at least in part by Andrade and his wife.

This filing details how Andrade allegedly convinced an individual, dubbed “VICTIM ONE,” to invest $1 million in the AML Bitcoin project, but transferred the funds into a JPMorgan Chase account held by “J.D.,” an associate of Andrade. The funds were then allegedly transferred to a third party “who acted at the direction of Andrade” at JPMorgan; then to an account belonging to “NAC Payroll Services Inc.”; then to an account at Wells Fargo owned by Andrade; then to a personal account at Woodforest National Bank.

The March filing alleges that these funds wre then used to purchase a residence from a Texas homebuilding firm.

“To date, Andrade and the NAC have not made any meaningful progress towards developing AtenCoin, AML Bitcoin, or ABTC,” the filing said, referring to two other names affiliated with AML Bitcoin.

This case is ongoing, according to court records.

UPDATE (June 25, 2020, 20:00 UTC): The U.S. Securities and Exchange Commission also filed charges against AML Bitcoin founder Rowland Andrade, as well as lobbyist Jack Abramoff.